An optimistic outlook for this year’s market
The year 2020 will always be remembered in history for many reasons from a pandemic to a presidential election. Throughout last year we have seen some ups and downs but what was especially noteworthy was how the real estate market held up in most areas. We saw homeowners reevaluate their needs for space and amenities while buyers strived to bid on their next home where they could take advantage of historically low home loan rates. As we embark on 2021 there is speculation on how the market will perform from various economists. Here is a closer look at some of the key points.
While there are all kinds of challenges with how the pandemic has affected some, this has been only one factor in an otherwise relatively strong economy. Vaccines are currently being administered which are on schedule to continue among more groups of Americans which will help with getting businesses back on track.
In past years we thought we had seen the lowest of the lows for mortgage rates, but then came 2020. Previously homeowners were sparked by seeing home loan rates in the 3’s and 4’s but this year rates dipped into the high 2’s for the average 30 year fixed mortgage. Interest rates are expected to remain around 3% per Freddie Mac and Fannie Mae which will help continue to fuel market activity.
As the economy improves and interest rates stay low, homes are predicted to continue appreciating in value as more look to purchase. Realtor.com’s Chief Economist states “We expect home sales in 2021 to come in 7.0% above 2020 levels, following a more normal seasonal trend and building momentum through the spring and sustaining the pace in the second half of the year.” Additionally, other reports have stated that the pandemic has changed how people are vacationing and could lead to the purchase of more second home or vacation properties.
Finally, with the above mentioned factors powering market activity along with lower inventory it is expected that home prices will continue to increase. A recent report states that The National Association of Realtors (NAR) also predicts that home prices could rise 6% during the new year.